Recent machinations of government agencies development repeated attempts to talk up the Us cheaper are not only an additional one exercise in willful ignorance, but they are now failing to inspire the political supporters who were responsible for them gaining power in the first place. A uncomplicated diagnosis of rudimentary (but oftentimes ignored) production statistics makes this trend painfully clear. Let's begin with Gross Domestic Product. The government has nearly broken its arm attempting to pat itself on the back over a up-to-date announcement that the retreat "ended" in June of 2009. However, the 'real' way to quantum national production and affluence is not with combination Gdp, but Gdp per capita. Put an additional one way, what no ifs ands or buts matters is not the total level of output, but the total production per person. When measured in this fashion, the current economic state of the United States still looks dour. Currently, per capita Gdp is 3.6% below its Q4'07 peak. The salvage has been very slow and anemic, with the appearance of gains only emerging when compared to the depths of the financial crisis. Further diagnosis of the economic data shows an even more disturbing trend where real underground sector production is shrinking as the government assumes an ever addition role in the economy. This removes the luster from any faux gains in per capita Gdp as the increased numbers are naturally resultant of more government spending that is being financed with debt. It all the time is and all the time has been true that the only real driver of economic affluence is the underground sector. By definition, the government must extract every dollar it spends from some corner of underground enterprise. When the real production of this underground firm contracts, it simultaneously arrests any real advancement in national affluence. In many cases, government entities will endeavor to conceal this erosion in national affluence with entitlement programs and stimulus projects that spend money they don't have on things they don't. Namely that the 'real' cheaper is being bled out by a bloated and increasingly authoritarian government. As astute investors, we need to become educated in strategies for financial survival that will allow us to weather this economic storm until a (hopeful) return to fiscal sanity and pro-growth policy.
Analysis of yield curves for government borrowing and lending rates shows a disturbing trend that has emerged since the Financial emergency of 2008. Under Ben Bernanke, the Federal support has reduced the Fed Funds rate for bank lending to nearly zero. This has had the ancillary ensue of pulling down rates for treasuries, as banks borrow from the government at near-zero interest rates and earn arbitrage profits by purchasing treasury notes. This strategy is being intentionally employed by the government to preclude capital from leaving the banks in the form of loans to individuals and businesses that would generate inflation, thanks to the rapid expansion of monetary reserves pushed on banks by the Fed. The net ensue of this move has been a contraction in the availability of financing for individuals and businesses, which is Further concentrating financial power in the hands of government.
A counter-intuitive side ensue of expansionary government can be increased corporate profits and stock valuations. The conjecture for this is because large corporations hold more political power than smaller entities, and can capture benefits from political lobbying when government is very powerful. On balance, this phenomenon is hurtful to the average citizen, because it arrests the natural process of competition and directs profits to entities with political connections instead of those with the best products and services. Thus, an era of immoderate government can simultaneously furnish high levels of corporate profits. The hitch is that these profits do not ensue from healthy economic expansion, but generate from the political favor earned from uncut lobbying efforts on the part of major corporations.
Because of this, it is potential that a shop value expansion may coincide with the trend toward more government seizure of power. In light of these trends, there may be an emergent occasion for venture in the stock shop since the current ratio of total shop capitalization relative to Gdp is at practically the same level as was experienced after the before the technology bubble and after the tech crash. It is foremost to note that the gains from increased government power will not be spread equally among all stocks and asset categories. The sectors most likely to see disproportionate gains are the ones who operate commodities such as oil, food and power or who directly advantage from government contracts. In the end, our current trend of economic decay is not good news for average citizens, but can comprise a sliver of occasion for astute investors. By concentrating your investments into assets like income properties, which will advantage from rent increases that ensue from reduced affluence pushing people out of the pool of buyers and into the pool of renters. This migration of people away from home possession will sacrifice vacancy, develop rents, and supply remarkable cash flow opportunities for astute investors that purchase this kind of venture property.
Action Item: safe yourself from a government entitlement collapse by becoming self adequate and investing in the businesses, products, and services that will growth in query as more people slip into subsistence.
We're Not Out of the (Economic) Woods YetIndustrial Electric Motors Air Conditioning Compressor Troubleshooting